The national minimum wage should be frozen for at least two years, a group representing small and medium-sized businesses has said.
Isme said the 12.4 per cent increase in the national minimum wage this year was significantly in advance of inflation.
Isme chief executive Neil McDonnell said subsequent increases in the national minimum wage should be linked to the rate of inflation.
The employers’ group on Thursday hit back at trade unions who earlier criticised what they said was the “false perspective” being articulated about the rising cost of doing business due to new Government measures to benefit workers.
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The Irish Congress of Trade Unions (Ictu) said measures such as a higher minimum wage, a statutory sick pay scheme, pension auto-enrolment and the right to request remote working would in most cases just bring Ireland more closely into line with norms and practices in other western European countries.
Isme said, however, it was entirely incorrect to suggest current labour market changes “merely bring Ireland into line with EU counterparts”.
“While trade unionists are describing the labour cost adjustments as ‘modest’, the fact is that the open market has decided otherwise. They are anything but modest and any SME owner will confirm that fact.”
“Wage inflation is the precise reason we are witnessing significant business closures around the country, particularly in the services sector,” Mr McDonnell said.
[ Unions hit out at employers’ criticism of new State measures to benefit workersOpens in new window ]
He said Ireland had the second-highest minimum wage – at €12.70 per hour – and the fourth-highest median wage in Europe.
“Low wages are not the problem here, high costs and lack of accommodation are.
“The manner in which the national minimum wage/living wage is being calculated ignores the fact that workers in large firms are paid €287.67 per week, (38 per cent) more than workers in SMEs; and public servants are paid €351.92 per week (46 per cent) more. This is based on figures from the fourth quarter of 2023. Small business cannot afford to be benchmarked against such high wages.
“As long as Ireland remains at or close to full employment, we will not see the labour cost issue impact unemployment levels,” Mr McDonnell said.
“What we will see is a progressive closure of small businesses such as childcare facilities, nursing homes, restaurants and convenience stores, especially outside our main cities, where multinational chains provide many of these services.”
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